tin at new high

Tin at new high, copper firm on Chinese demand
Mon 26 Mar 2007, 9:39 GMT
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LONDON (Reuters) - Tin set a fresh high and copper prices on the London Metal Exchange were firm on Monday, supported by falling inventories indicating strong Chinese demand, analysts said.

"Copper is still exceptionally strong...prices look to hold above $6,000 during the second quarter," analyst Michael Widmer at Calyon said.

Falling inventories, down over 15 percent from mid-February to 181,550 tonnes, were an important sign of strong demand, in particular from China, and this supported prices, Widmer said.

Copper for three-month delivery
Tin set a new record high of $14,400, supported by supply concerns at the second largest tin supplier Indonesia.

Tin was at $14,300/14,340 against its last quote on Friday at $14,325/14,350.

"Tin we expect to continue steady," an LME trader said.

The early part of the week could see some consolidation and trading was seen relatively quiet with only four days until the end of the quarter and, for some participants, the end of the financial year.

But trading would pick up in the seasonally busy second quarter, traders said.

Deutsche Bank upgraded its average cash copper price forecast for 2007 and 2008 and the bank's report said the first quarter's macro-economic data from China was supportive.

Chinese industrial production growth of 18.5 percent for the first two months of the year had a stimulatory effect on import demand for refined and raw materials in China, the report said.

"We have raised our copper price forecast by 6 percent to 2.86 cents per pound for 2007 as increased Chinese consumption and continuing supply constraints are expected to help neutralise the impact of weak U.S. consumption," it said.

The bank raised its 2008 forecast by 7 percent to $5,523.

ZINC

Numis Securities upgraded its commodity price forecasts for 2007 and 2008 on strong metal imports from China and continuing firm global GDP growth.

But Numis kept the three-months zinc target unchanged at $3,307. LME zinc was $65 higher at $3,220/3,240.

Shanghai's July zinc futures contract gained 2.5 percent on its first day of trading on the Shanghai Futures Exchange to close at 29,220 yuan.

"It is good for the market to have a more offical price," Widmer said.

The price was underpinned after the number of cancelled warrants doubled. Total stocks in LME warehouses stood at 109,475 tonnes, some three and a half day of global consumption.

"By simply correlating zinc prices with current inventory levels you could justify a zinc price between $3,500 and $3,700 per tonne," Widmer said.

Nickel was up $600 or 1.4 percent at $42,700/42,900, recovering ground after a 7.1 percent slide on Friday.

Numis Securities expected the three-months nickel price to trade at an average of $33,069 in 2007, falling to $24,251 in 2008.

Lead was at $1,895/1,910 against $1,905 and aluminium was at $2,753/2,758 versus $2,762 at Friday's close.

In industry news, Xstrata's 4.6 billion Canadian dollar bid for Lionore fuelled mining stocks higher on the London Stock Exchange.

Xstrata's shares traded at 2,621 pence, up 1.71 percent. BHP Billiton, Rio Tinto and Anglo American were also among the 10 biggest gainers up over 1 percent.